Use of gas as fuel for transport to rise, study shows
The amount of gas used as a fuel for road transport will increase substantially in the coming years, according to a study published by ACER, the European Agency for the Cooperation of Energy Regulators.
In the study’s base scenario, ACER forecasts the amount of gas used for transport on roads and waterways to increase more than tenfold by 2025, with heavy-duty transport expected to show the largest growth.
Competitive fuel pricing and the need to comply with the EU’s stricter emission standards have established natural gas as a real alternative to conventional fuels, says ACER. In particular the use of liquefied natural gas for road transport will gain ground in the years to come.
In this study ACER focussed in particular on the regulatory environment of the supply of natural gas. ACER states that the market development of both compressed natural gas used by cars and other light-duty vehicles as well as LNG will depend on EU policies promoting its use. The European Union has recently adopted the Directive on Alternative Fuels Infrastructure, which obliges the development of a gas-refuelling network throughout the EU. This will help deliver some of the investment security that the industry needs.
However, uncertainty regarding the future taxation of gas is holding back further market growth. Sustained low taxation on gas in comparison to other fuels will be necessary to support further investment in vehicles and infrastructure for natural gas, ACER concludes.
ACER evaluates the role of new developments in the gas supply chain and is fairly optimistic about the needed adaptations to accommodate the larger use of gas in transport. For instance, virtual pipelines, the non-pipelined supply of CNG/LNG via road, rail or sea to end users, could close the last gaps in the infrastructure for transport use in the short-term due to reduced investment costs compared to pipelines. Because of the existing synergies with the use of gas in transport, further development of virtual pipelines is likely, ACER highlights, as the combination of both applications helps to reach economies of scale and increases cost effectiveness. This would stimulate consumption while bridging the period until structural infrastructure changes have been made.
ACER notes that the new power-to-gas technology, currently in the pilot phase, will become fully commercial in the medium-term. Once the technology is fully mature, by 2022 according to ACER’s estimations, Power-to-Gas plants will act as a balancing tool in the electricity market, absorbing curtailed renewable energy.
Press Release; Image: Fluxys